For an economy to advance it needs human talent. And for those economies rapidly expanding and seeking to diversify into a broader spread of sectors, the problem of sourcing enough talent with the necessary skills is a pressing one. For years, employers in the Middle East have reported a sizable gap between the talent they need to keep their companies growing and the talent they can actually find. This gap between the demand and supply of talent is called a skills gap. The skills gap is a universal problem that impacts nearly every industry, job and employer. Such an imbalance can be crippling to economic progress; it puts strain on governments, and leave millions unemployed.

It is not just the Middle East region that faces this ever-widening skills gap, CEOs the world over have cited similar concerns. There is genuine worry across most industries that if the skills gap is not closed, or at least reduced, the ability to grow and to innovate will be severely constrained. According to the just-released Bayt.com 2016 Middle East Skills GapSurvey, employers across the Middle East are experiencing difficulty filling open positions as they struggle to find candidates with the required skillsets, especially for senior positions. ‘Soft skills’ are regarded as most lacking in prospective employees, while ‘technical skills’ are often seen as posing the least challenge. According to the same survey, soft skills, such as ‘creative thinking’ (63%) and ‘critical thinking’ (63%), were seen as the most difficult skills to find at a senior level.

Putting things in context

The MENA region suffers from the highest youth unemployment rate in the world. As reported by the ILO, the 2014 youth unemployment rate was 28.2% in the Middle East and 30.5% in North Africa, the highest in the world and more than double the global average of 13%.

In a survey published in 2014, Middle East millennials were asked about their priorities in life. The overwhelming response was what you would expect from young people anywhere in the world: they want good health, financial stability and a successful career. Unfortunately, the same survey also showed the gap between these hopes and reality: 59% rely on their family for supplementary income, and 28% find it difficult to make ends meet. According to the 2015 Fresh Graduates in the MENA survey, 76% of fresh grads said that the foremost challenge of their generation is finding a job. Moreover, almost 30% stated that their jobs were not related to their studies, and more than 80% viewed their current jobs as interim and are looking to leave.

The employer vs. job seeker split

Among the myriad factors contributing to the existing skills gap, our research has shown that one stands out: a profound disconnect between the perceptions held by employers and the perceptions held by job seekers. In fact, evidence shows that it is challenging for employers across the Middle East to find candidates with the required skills. This difficulty is accentuated when recruiting for senior positions, with seven in 10 respondents (70%) claiming they find it difficult to find senior-level candidates with the required skills. The situation seems to be slightly easier when recruiting for junior positions, although almost half of them (49%) still rate the hiring process as ‘difficult.’

The Bayt.com 2016 Middle East Skills Gap Survey, released last month, investigates the skills gap crisis in the Middle East. It provides a thorough investigation of the skills gap crisis, both from an employer’s point of view and job seeker’s point of view, and ends with a list of solutions to tackle this problem in the best way possible. The report describes what employers mean when they say job seekers are ‘unemployable.’

When comparing the feedback of employers to the perception of jobseekers, the skills gap is seen even more clearly. Contrary to employer feedback, jobseekers generally regard themselves as having a high degree of competency across most skills, with those seeking senior positions being more confident regarding their skills and rating themselves higher on all skills, including soft skills. Despite this general positive view of their own skill level, half of the job seekers surveyed say it is still difficult for them to secure a job.

Causes of the skills gap

Generally speaking, the skills gap is a byproduct of multiple trends that can be summarized into two main categories: economic conditions leading firms to institute rigorous cost management strategies, and modern-day skill requirements outpacing formal education. By understanding these issues, companies, education providers and governments can learn to combat the skills gap and develop strategies to protect from future skill deficits. The following sections will analyze these causes.

1. Economic conditions The first driver of the widening skills gap are the financial decisions that companies make in response to globalization, increased competition, global economic events, and investor growth expectations. These factors have intensified in recent decades forcing corporations to operate with thinner profit margins and make long-term skills development concessions in order to meet short-term financial goals. While this practice is necessary for corporate survival, intense cost management has led to a drop in skills development programs, like apprenticeship programs and training and development budgets.

2. Skill requirements outpacing the formal education system A second contributing factor are the changes to the skills required in the modern workforce. Employers now require skills such as ‘critical thinking’, ‘leadership’ and the ‘use of technology.’ The workplace has become more automated requiring employees to possess advanced analytical and mathematical skills. High-technology jobs are growing at a very rapid rate. The issue is that current education systems have not kept pace with the demand for these skills. We see many students pursuing education outside of science, technology and engineering, and are therefore being ill-equipped to take on jobs that rely on critical thinking, teamwork and problem solving.

Solutions to overcome the skills gap

Now that the causes of the skills gap are understood, it’s time to review combative strategies. Current research and best practice points to three remedy areas. First, a firm must gain a comprehensive understanding of its own skill supply and demand through rigorous workforce planning. Second, firms need to engage in external partnerships to develop talent sources. Finally, companies must refine internal talent attraction and assessment practices to widen talent pools. These three recommendations are discussed in depth.

1. Understanding skills supply and demand Companies must begin by understanding their own local skills gap through well-defined workforce planning. This starts with a clear understanding of the talent requirements to meet organizational growth goals. Human resources’ role is to then implement a data-driven workforce planning process that predicts the company’s short and long-term hiring needs. Understanding supply and demand allows companies to strategically allocate resources to bridge skills gaps in the most critical areas.

2. Develop talent through partnerships The magnitude of the skills gap should leave no one firm solving the issue alone. Companies need to recognize that bridging the skills gap requires multilateral participation from governments and educational institutions.

a. Education Perhaps the biggest mistake a company can make is to stand idle and expect the education system to provide the skills of the future. Companies must get involved by dedicating resources in the form of money, time and people. Firms should play an active role in influencing curriculum by networking with faculty members and sitting on advisory boards. They should also provide students with hands-on training by donating equipment, offering real-world projects and funding vocational training programs. This type of partnership ensures that education systems are aligned with employer demand while gaining the added benefit of building intimate relationships with prospective job seekers.

b. Government Government stakeholders play an important role in funding skills development and pushing education reform. Unfortunately, most employer-government relations to date have focused on lobbying for tax incentives and cheaper labor. Employers should move beyond this conversation and focus on long-term skills development in the community. According to the 2016 Middle East Skills Gap Survey, 25% of respondents believe that governments should offer programs for the unemployed to develop their skills, and 40% think that companies, educational institutions and governments should work together to predict future skills needs.

3. Revise internal talent attraction and assessment practices Once a company understands its skills supply and demand and has established a sustainable talent pool, it is time the skills gap is closed with sound staffing practices. This is accomplished by revamping talent attraction, talent assessment and talent development systems.

a. Talent attraction When battling for talent, a company needs to be proactive about talent attraction and position itself as the best place to work in its industry, country or region. Attraction takes place at the firm level through job postings, premium company profiles, and information sessions at the macro-industry level.

b. Talent assessment With limited talent supply, firms need to widen the selection pool by looking beyond traditional indicators of candidate success. Such a practice omits the CV and focuses on statistically-valid and reliable candidate predictors of future performance. For example, companies can hire individuals based on general competencies and expertise displayed on leading professional platforms, such as Bayt.com Specialties, or by looking at biographical data and aptitude-testing, rather than years of experience, education or certifications. This type of approach allows companies to access traditionally untapped talent pools.

c. Talent development The final piece of the skills gap puzzle is to create and revise training programs that fill the gaps identified in the workforce planning process. According to 42% of respondents in the 2016 Middle East Skills Gap Survey, the best solution to tackle the skills gap crisis is by having companies provide enough training opportunities to employees. Programs should include both in-house development for re-skilling and externally focused apprenticeship programs. If the training is done appropriately then companies should have a healthy supply of employees to achieve their goals.

The skills gap poses a genuine threat to economic progress and has the potential to leave nations stalled, millions unemployed and prosperity dwindling. The skills gap problem should be everyone’s problem; not just an employer or job seeker concern. It is a problem that requires multilateral participation from many stakeholders: employers, governments and education providers. Employers can do their part by engaging in thoughtful planning, cooperating with others and reaching across boundaries, and getting strategic about their staffing practices.